WTI Rises To $78.30 As Houthi Strikes Heighten Supply Disruption Threat

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  • West Texas Intermediate (WTI) oil prices rebound, reaching around $78.30 per barrel amid escalating concerns over supply disruptions from the Middle East.
  • The Iran-led Houthi group targets shipping vessels in the Red Sea, including the Belizeflagged cargo vesse, prompting a European Union naval mission to safeguard Red Sea shipping lanes.
  • The crude oil market also responds positively to economic news from China, with the People’s Bank of China keeping the oneyear Loan Prime Rate steady while reducing the fiveyear rate.
  • Meanwhile, Saudi Aramco contemplates issuing a bond with a maturity of up to 50 years in 2024 to optimize its capital structure.

Houthi Strikes and EU Response: Escalation in Red Sea Tensions

WTI prices rally as Houthi drone and missile strikes target shipping vessels in the Red Sea and Bab alMandab Strait. The Belizeflagged cargo vessel is among the attacked ships, leading to the evacuation of its crew off the coast of Yemen. Responding to these assaults, the European Union launches a naval mission, deploying warships and early warning systems to protect Red Sea shipping lanes from further Houthi threats. The attacks heighten concerns over oil supply disruptions, contributing to the rise in crude oil prices.

Market Dynamics and China’s Influence: WTI’s Positive Reversal

Crude oil prices receive support not only from geopolitical tensions but also from positive economic developments, especially in China. The People’s Bank of China maintains the one year Loan Prime Rate at 3.45% but reduces the five year rate by 25 basis points to 3.95%, aiming to bolster the Chinese economy. Additionally, China sees a significant rise in annual tourism revenues during the Lunar New Year holiday period. The combination of geopolitical concerns and favorable economic news contributes to WTI’s positive reversal.

Saudi Aramco’s Strategic Move: Bond Issuance Plans

Saudi Aramco explores strategic financial moves amid the geopolitical climate, considering the issuance of a bond in 2024 with maturities extending up to 50 years. Chief Financial Officer Ziad AlMurshed reveals this potential bond issuance as part of Saudi Aramco’s broader strategy to optimize its capital structure. The contemplated move reflects the company’s proactive approach to financial management in the face of evolving market dynamics and geopolitical uncertainties.

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Source: Fx street

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